The iPad2 Cover – Smart. Innovative. Revenue and Margin King!

Ever since my parents bought my first computer – an Apple IIe, I’ve been an Apple Fan. Sure they have made their mistakes along the way and I’ve owned (and still own) Windows based computers. I love great design and one thing Apple has always done is great design, even the boxes their computers are packed in are smart, well thought out and have excellent UX.

When Apple lunched the iPad2, I was immediately taken by the cover – more so then with the iPad2. The iPad2 had the features I expected but the cover surprised everyone and I have yet to met a person that doesn’t love the design and ingenuity. Aside from the great design, my quick follow on thoughts are this:

I want one

They just captured the lost revenue on iPad2 accessories

Everyone will buy one vs. the other third party covers – since only Apple’s will have magnet

BIG REVENUE and BIGGER MARGINS

Second quarter will blow past Wall St. expectations

If you have ever walked into an Apple store, I’m sure you have spent time at the accessories wall. Apple has certainly created a great business for a lot of accessory companies over the past years and they have always had some great accessories. I had an Apple joystick at one point (I was great at Karateka). Apple’s Magsafe power cords are a great example of smart design and great margin accessory products, for which Apple holds the patent and does not license the technology. Not many people buy multiple power adapters. I bet people will buy multiple covers. But even if consumers only buy one iPad2 cover, Apple still wins since it’s one more cover sale they were not getting with the last device release.

I’m not the only one that is thinking this way about the sheer brilliance of the iPad2 cover [revenue] strategy. I follow Asymco “curated marketing intelligence”. This past week Horace Dediu’s (@asymco) acticle, The Billion Dollar Smart Cover nailed it. Although I think his estimate of only 60% of iPad2 buyers getting the cover is conservative. I bet that Apple reports 85%.

Whatever the percentage, I really like the continued smart design that Apple keeps cranking out. Call me a fanboy if you want but all I can say is show me another device or media company that innovates and has the margins of the kids down in Cupertino.

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